„The single biggest reason why startups succeed“ (Bill Gross)

What are the most important factors for a startups success? Bill Gross Serial entrepeneur and founder of idealab researched 200 companies and came up with 5 factors:

  • Idea
  • Team
  • Business Plan
  • Funding
  • Timing

Here you can watch his TED talk about it.

My favorite quote:  he quotes Mike Tyson:
„Everybody has a plan, until they get punched in the face.“

So his finding is that TIMING is the most critical factor to success.

To be more exact, it is all about the customer and meeting their needs – at the right time!.

Here is a transcript of his speach:

00:11I’m really excited to share with you some findings that really surprise me about what makes companies succeed the most, what factors actually matter the most for startup success.

00:24I believe that the startup organization is one of the greatest forms to make the world a better place. If you take a group of people with the right equity incentives and organize them in a startup, you can unlock human potential in a way never before possible. You get them to achieve unbelievable things.

00:42But if the startup organization is so great, why do so many fail? That’s what I wanted to find out. I wanted to find out what actually matters most for startup success.

00:51And I wanted to try to be systematic about it, avoid some of my instincts and maybe misperceptions I have from so many companies I’ve seen over the years.

00:59I wanted to know this because I’ve been starting businesses since I was 12 years old when I sold candy at the bus stop in junior high school, to high school, when I made solar energy devices, to college, when I made loudspeakers. And when I graduated from college, I started software companies. And 20 years ago, I started Idealab, and in the last 20 years, we started more than 100 companies, many successes, and many big failures. We learned a lot from those failures.

01:22So I tried to look across what factors accounted the most for company success and failure. So I looked at these five. First, the idea. I used to think that the idea was everything. I named my company Idealab for how much I worship the „aha!“ moment when you first come up with the idea. But then over time, I came to think that maybe the team, the execution, adaptability, that mattered even more than the idea.

01:45I never thought I’d be quoting boxer Mike Tyson on the TED stage, but he once said, „Everybody has a plan, until they get punched in the face.“ (Laughter) And I think that’s so true about business as well. So much about a team’s execution is its ability to adapt to getting punched in the face by the customer. The customer is the true reality. And that’s why I came to think that the team maybe was the most important thing.

02:11Then I started looking at the business model. Does the company have a very clear path generating customer revenues? That started rising to the top in my thinking about maybe what mattered most for success.

02:20Then I looked at the funding. Sometimes companies received intense amounts of funding. Maybe that’s the most important thing?

02:26And then of course, the timing. Is the idea way too early and the world’s not ready for it? Is it early, as in, you’re in advance and you have to educate the world? Is it just right? Or is it too late, and there’s already too many competitors?

02:38So I tried to look very carefully at these five factors across many companies. And I looked across all 100 Idealab companies, and 100 non-Idealab companies to try and come up with something scientific about it.

02:48So first, on these Idealab companies, the top five companies — Citysearch, CarsDirect, GoTo, NetZero, Tickets.com — those all became billion-dollar successes. And the five companies on the bottom –Z.com, Insider Pages, MyLife, Desktop Factory, Peoplelink — we all had high hopes for, but didn’t succeed.

03:05So I tried to rank across all of those attributes how I felt those companies scored on each of those dimensions. And then for non-Idealab companies, I looked at wild successes, like Airbnb and Instagram and Uber and Youtube and LinkedIn.

03:19And some failures: Webvan, Kozmo, Pets.com Flooz and Friendster. The bottom companies had intense funding, they even had business models in some cases, but they didn’t succeed. I tried to look at what factors actually accounted the most for success and failure across all of these companies, and the results really surprised me.

03:36The number one thing was timing. Timing accounted for 42 percent of the difference between success and failure. Team and execution came in second, and the idea, the differentiability of the idea, the uniqueness of the idea, that actually came in third.

03:50Now, this isn’t absolutely definitive, it’s not to say that the idea isn’t important, but it very much surprised me that the idea wasn’t the most important thing. Sometimes it mattered more when it was actually timed.

04:01The last two, business model and funding, made sense to me actually. I think business model makes sense to be that low because you can start out without a business model and add one later if your customers are demanding what you’re creating. And funding, I think as well, if you’re underfunded at first but you’re gaining traction, especially in today’s age, it’s very, very easy to get intense funding.

04:20So now let me give you some specific examples about each of these. So take a wild success like Airbnb that everybody knows about. Well, that company was famously passed on by many smart investorsbecause people thought, „No one’s going to rent out a space in their home to a stranger.“ Of course, people proved that wrong. But one of the reasons it succeeded, aside from a good business model, a good idea, great execution, is the timing.

04:41That company came out right during the height of the recession when people really needed extra money,and that maybe helped people overcome their objection to renting out their own home to a stranger.

04:50Same thing with Uber. Uber came out, incredible company, incredible business model, great execution, too. But the timing was so perfect for their need to get drivers into the system. Drivers were looking for extra money; it was very, very important.

05:02Some of our early successes, Citysearch, came out when people needed web pages. GoTo.com, which we announced actually at TED in 1998, was when companies were looking for cost-effective ways to get traffic. We thought the idea was so great, but actually, the timing was probably maybe more important.And then some of our failures. We started a company called Z.com, it was an online entertainment company. We were so excited about it — we raised enough money, we had a great business model, we even signed incredibly great Hollywood talent to join the company. But broadband penetration was too low in 1999-2000. It was too hard to watch video content online, you had to put codecs in your browser and do all this stuff, and the company eventually went out of business in 2003.

05:38Just two years later, when the codec problem was solved by Adobe Flash and when broadband penetration crossed 50 percent in America, YouTube was perfectly timed. Great idea, but unbelievable timing. In fact, YouTube didn’t even have a business model when it first started. It wasn’t even certain that that would work out. But that was beautifully, beautifully timed.

05:58So what I would say, in summary, is execution definitely matters a lot. The idea matters a lot. But timing might matter even more. And the best way to really assess timing is to really look at whether consumers are really ready for what you have to offer them. And to be really, really honest about it, not be in denial about any results that you see, because if you have something you love, you want to push it forward, but you have to be very, very honest about that factor on timing.

06:22As I said earlier, I think startups can change the world and make the world a better place. I hope some of these insights can maybe help you have a slightly higher success ratio, and thus make something great come to the world that wouldn’t have happened otherwise.

06:34Thank you very much, you’ve been a great audience.



Ein Grund mehr warum Design wie moderne Kunst ist

Bei Werbung, Design und moderner Kunst fühlen sich alle befähigt über deren Qualität zu urteilen. Weil man eben Werbung, Design und Kunst ausgesetzt ist meint man, ein „Experte“ zu sein. Zu diesem Thema gefällt mir besonders das Titelbild des Buches Das kann ich auch! Gebrauchsanweisung für moderne Kunst
– es bringt das Dilemma genau auf den Punkt:

Warum schreibe ich hierüber? Mein Schwerpunkt sind Business Cases und Business Modelle für digitale Medien, insbesondere Apps für Smartphones. Wie schon geschrieben ist das Design einer der 5 kritischen Erfolgsfaktoren in der App Vermarktung. Meiner Erfahrung nach wird das Design bei der Entwicklung aber immer wieder unterschätzt und / oder stiefmütterlich behandelt. Das fängt bei einer realistischen Einschätzung der benötigen Zeit und Ressourcen an und hört bei den Kosten auf. Getreu dem Motto „Für den ersten Eindruck bekommst du keine zweite Chance“ ist das Design DIE Visitenkarte der zu vermarktenden App. Also ganz konkret das Icon im App Store und die Screenshots sind die ersten Kaufbeinflusser. Genauso wichtig ist ein sehr sprechender Name der App. Eine ganz gute Anleitung für Selberdesigner ist z.B. hier:  http://medialoot.com/blog/how-to-design-an-iphone-app-in-photoshop/

In der Kombination „für sich sprechender Name“ und gutes Logo & Design entscheidet der Nutzer in Millisekunden im Unterbewusstsein ob diese App im relevant, gut, glaubwürdig, wertvoll, einfach, sicher, wertvoll erscheint. Ein seriöser Titel für eine Finanzen App und ein Icon im Comic Stil passen einfach nicht zueinander. An dieser Stelle ist der größte Hebel für erfolgreiche Vermarktung anzusetzen. Der Kunde sucht etwas bestimmtes, die App erscheint in der Trefferliste und dank oder wegen des Designs entscheidet sich der Kunde innerhalb von Hundertstel Sekunden ob er weiter klickt auf die App Inhalte oder sich eine andere App ansieht. Einmal auf die App geklickt muss dann die Beschreibung natürlich überzeugen – neben dem Text vor allem und zu erst selbst und für sich sprechende Screenshots der App – also dem Design.

Hat der Kunde sich entschieden die App auszuprobieren und lädt sie herunter, darf er nicht geschockt werden. Viele App Anbieter polieren ihre App Beschreibungen im Store so auf, dass die eigentliche App überhaupt keinen Wiedererkennungswert hat. Damit ist ein Vertrauensbruch  begangen und es ist sehr schwer diesen mittels eines guten Produktes zu kitten. Gerade bei einer Freemium Strategie, die auf In App Verkäufen basiert ist solch ein Vertrauensbruch äuserst schädlich.

Daher sollte eines klar zum Thema Design: es ist wichtig, zu wichtig um „mal eben so das nebenher noch zu designen„. Der erste Eindruck zählt und auch beim App Design gilt: „Kann ich auch“ – „Kannst du nicht“.

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